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Corporation to takeover AALRT from Chinese operators

Corporation to takeover AALRT from Chinese operators

  • Corporation battling hard to pay foreign debt

The Ethiopian Railway Corporation (ERC) is preparing to take over the operation of the Addis Ababa Light Rail Transit (AALRT) system from the Chinese handler, contracted to build and manage the operational aspect of the country’s first light rail transit system.

The Corporation told the Enterprise Affairs Standing Committee of the House of Peoples’ Representatives (HPR) yesterday that it is finalizing its preparation to fully take control of the management of the railway system in the coming weeks. 

While presenting its six-month performance report, the corporation officials led by CEO, Birhanu Beshah (PhD), told members of the standing committee that the handover of the management and operational activities are scheduled to take place next week; while the necessary preparation has already been finalized and approved by the government.

Originally, the handover was scheduled to take place some three months ago. However, the timeframe has to be changed due to some remaining construction works which needed to be completed by the contractor before the handover. The consultant’s contractual agreement as well ended three months ago.

Now, since the contractor has finalized the remaining work, it is expected to hand over the design document and the operation over to the Corporation this month, the CEO disclosed.

The light rail transit system was built by a Chinese contractor—China Railway Engineering Corporation (CREC) — at a total cost of USD 475 million, some 85 percent of which was covered by China's Export-Import Bank.

The Corporation’s foreign debt status as well was one of the issues discussed by the members of standing committee. The Corporation’s outstanding foreign loan portfolio includes the USD 3.4 billion borrowed for Addis-Djibouti Railway line, the USD 1.4 billion for Awash-Woldia and the other USD 1.5 billion that is expected to finance the Hara Gebeya-Mekelle projects apart from the USD 475 million loaned for AALRT.   

So far, USD 165.3 million has been paid which includes USD 76.3 million for Addis-Djibouti and USD 89 million for Awash-Woldia railway projects.

The finance which is implemented for debt payment was secured from the various government enterprises, the CEO said.  Among the financial sources the highest contribution is made by Ethio Telecom and Commercial Bank of Ethiopia (CBE). In the first six months it secured 4.2 billion birr from Ethio Telecom earmarked to pay the Corporation’s debt. However, the CEO disclosed that it secured only four billion birr out of 12 billion birr it was supposed to be secured from CBE. He also indicated that foreign exchange shortage has also been a big challenge for the corporation in its attempt to pay its debt.

The Chinese-built 756 km electrified rail project connecting landlocked Ethiopia to Djibouti officially announced commencement of commercial operations last week. However, practically, it began service this week on Tuesday.

Contracted by two Chinese companies, the first 320 km of the rail project from Sebeta to Mieso was carried out by the China Rail Engineering Corporation (CREC), while the remaining 436 km from Mieso to Djibouti port section was built by the China Civil Engineering Construction Corporation (CCECC).

Meanwhile, the Awash-Woldya/Hara Gebeya, which involves the construction of 390km railway line by the Turkish-based company, Yapi Merkezi, at a cost of USD 1.7 billion, is being built between Awash and Woldia towns and has now reached over its 60 percent of completion.